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Changes in H-2A add burdens to employers

Proposed changes in the H-2A program, a system by which U.S. agriculture and other industries may obtain immigrant labor legally, likely will do more to add burdensome paperwork and expense to farmers than to provide a streamlined option for acquiring needed workers, say Texas observers.

“I've looked briefly at some parts of the proposed new regulations, and my initial reaction is that they are very focused on record keeping and employer verification of immigration status of ag workers, which is not what most farmers wanted to see,” says Parr Rosson, professor and Extension economist and director of the Center for North American Studies Department of Agricultural Economics for the Texas AgriLife Extension/AgriLife Research.

“This seems like a cumbersome system that is going to try and shift as much of the burden to producers as possible.”

Bernie Thiel, a vegetable producer in Lubbock, Texas, agrees. “These changes require more bookwork and more paperwork. I just have to wonder who writes these rules and regulations. And what are they trying to do to the farmer?”

Thiel says the H-2A program would require him to pay workers just over $9 per hour, provide housing (that complies with government specifications) and provide transportation from the worker’s place of residence to the work site and back.

“The average man-hour cost for a farmer to use H-2A is $14 to $15 per hour, if a farm does not already have adequate housing,” Thiel says.

Thiel’s and Rosson’s take on the proposed changes differ significantly from the optimistic tone struck by Deputy Secretary of Agriculture Chuck Connor in announcing proposed changes in early February.

“The changes we are proposing today will go a long way towards ensuring that America's farmers will have a stable, legal workforce they can count on at harvest time,” Connor said. “Because farmers are tied to the land and the natural cycles of growth and harvest, their need for labor is urgent and non-negotiable. This is particularly true of the fruit and vegetable growers who employ so many of our farm workers. A crop that rots in the field — for want of enough hands to pick it — can put a farmer out of business pretty fast.”

He said farmers who participate in the current H-2A program “and meet all of its requirements still run the risk that because of bureaucratic delays beyond their control, they won't have a legal workforce in place when they need it. We estimate that our agricultural work force numbers about 1.2 million at its seasonal peak in July.”

Connor also said the program is currently under-utilized. “Last year, agricultural employers hired only about 75,000 farm workers through the H-2A program. We believe between 50 percent and 70 percent of the agricultural work force is in the country illegally. That translates to between 600,000 and 800,000 people. At the upper end of that range, the H-2A program is legalizing fewer than 10 percent of eligible workers. And that is simply not acceptable.”

He said proposed changes would streamline the process.

Not likely, says Thiel. “It’s amazing to consider what we need in a program and what they give us.”

Thiel employs seasonal laborers, some of whom have worked for him for many years. If he used H-2A for additional labor he would have to increase wages for his entire work force and provide housing.”

He says government regulations also require employers to provide workmen’s compensation benefits to H-2A labor.

“That would create turmoil for my operation. The economics is absurd. We sell on the open market and can’t pass the extra expense along to buyers.”

He says some workers he’s employed for years also may want to go through the H-2A program for the extra benefits.

And the program provides more “hoops to jump through. For instance, if a U.S. citizen wants a job, we have to lay off the H-2A worker and hire the citizen.”

“The changes will streamline and simplify the program,” Connor said. “Yet they will also provide new protections to U.S. workers by assuring them wider opportunities to learn about farm labor jobs that are available in their area.”

He said using Department of Labor's Occupations Employment Survey data will provide “more graduated and finely tuned wage data,” which will be linked to specific job categories and descriptions and “should allow us to bring H-2A wage rates much closer to actual prevailing wages.”

Connor said the new program adds record keeping responsibility to employers.

“We are also requiring them (farmers) to keep records on hand for five years to prove that they did in fact comply with all the requirements of the law. We are making them subject to audits to confirm that they have in fact been doing the right thing.”

Thiel says keeping up with additional paperwork likely would require additional office help.

“I believe both groups have a great deal to gain here and will seize this opportunity,” Connor said.

Hardly, says Thiel.

“Labor already accounts for 50 percent of my production expense. If I use H-2A, I’ll add 30 percent to 40 percent to my costs.” And those are costs he can’t pass along to buyers and, ultimately, consumers.

“Before I go to H-2A for labor, I’m through,” he says.

Thiel is building housing for his labor, a necessity, he says, in the current labor situation. “We have to provide housing to survive. I may not charge for anything other than utilities, maybe not even that. It’s an added expense and minimum wage has already gone up.

“At some point we will have to pass some of these costs along or we’ll all go out of business.”

He wonders if the U.S. government is trying to move food production offshore, as it has much of the country’s manufacturing capability. “What would it be like if we depended on a foreign country for 90 percent of our food?” he asks. “What kind of a predicament could we get in?”

John McClung, president and CEO Texas Produce Association, says he’ll reserve final judgment until final rules are written and until he’s better acquainted with the details of the USDA proposal.

But he says some changes will add to employers’ burdens. “Time necessary to get employees is extended,” he says. “And they still have housing and transportation costs. So far, I don’t see anything that will do a lot of people a lot of good.

“We need for Congress to pass the Ag Jobs (bill) and to pass comprehensive immigration reform.”

Rosson says the labor problem could result in increased food prices. “We’ve seen some fairly major shortages in field labor the past couple of seasons.”

If that shortage continues, especially in some South Texas vegetable operations, it could lead to higher cantaloupe and onion prices this summer.

Rosson says a study of impacts of immigration on Texas agriculture reveals over the past three growing seasons a 20 percent to 25 percent average labor shortage in field operations including such diverse businesses as fruit and vegetable farms to nursery and dairy operations.

Fruit, vegetable and nursery industries combined produce about $2.1 billion in income annually and account for 46,000 jobs, he says.

“With a 20 percent labor loss, the value of business activity comes out to $363 million in losses, some $545 million in lost income and 9,260 in lost jobs as we go through those periods of labor shortages.”

He says labor shortages in the state’s cantaloupe operations have been acute. “One area lost $400,000 in farm sales in South Texas and resulted in $160,000 in lost income and 43 jobs directly on the farm.” Support activities such as packing accounted for another $69,000 and 112 lost jobs.

“All in all, cantaloupe lost $400,000 at the farm level, translating into 219 lost jobs and the loss of well over $200,000 in additional business activity,” Rosson says. “That’s a major impact, particularly in small regions of the state. Labor shortages in certain rural regions also hurts the state’s dairy industry. The Texas dairy industry produces about $1 billion a year in raw milk, $2 billion in business activity and employs about 10,000 people statewide.

A 10 percent labor shortage in the dairy industry led to a 20 percent drop in milk production, Rosson says. Monetary losses amounted to $493 million in lost dairy production in Texas, $955 million in lost business activity, and 3,900 lost jobs.

If the labor shortage intensifies, Rosson anticipates additional “major impacts.”

Effects could include switches to less labor-intensive and potentially less valuable crops. Some businesses could consider moving to other locations, perhaps Mexico. “If (this type of situation) continues for an extended period of time, we could see some structural changes in industry,” he says.

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